Wood revenues rise thanks to market rebound

Wood has posted an overall loss in its half-year results, as it reported increased revenues, showing signs of the global rebound in its core oil and gas markets.

Wood CEO Robin Watson said the group was confident of prospects for the latter half of the year. Picture: Contributed

The Aberdeen-headquartered energy services group reported a revenue boost of 13 per cent for the year ended 30 June, hitting $5.38 billion (£4.2bn), as some analysts predicted a return to the FTSE 100.

Wood raised its predicted cost savings from last year’s merger with rival Amec Foster Wheeler from $170 million to $210m as it reported integration was “ahead of schedule”.

However, the company posted a loss of $52m, compared with a profit of $6m for the same period last year, which it attributed to non-cash amortisation charges of $125m and exceptional costs of $101m, including an impairment charge.

Wood cited “improved operational cash flow” for net debt dropping slightly to $1.6bn, down from $1.65bn at the end of 2017.

The news comes on the back of yesterday’s announcement that Wood has secured a six-year contract with Shell in the Philippines, creating 60 jobs and expanding its footprint in south-east Asia. The group’s order book stands at $10.6bn.

Chief executive officer Robin Watson said the group was “confident” of prospects for the latter half of the year.

He said: “Wood is delivering strong operational cashflows which underpin our deleveraging plan.

“We have good revenue visibility and remain confident of delivering a stronger second half. Our full year outlook is unchanged; we are seeing recovery in our core oil and gas market and good contract awards in broader industrial sectors.

“We remain on track to deliver growth in 2018 in line with previous guidance and market expectations.”

David Barclay, head of office at investment manager Brewin Dolphin’s Aberdeen branch, said: “The rising price of oil has had real benefits for Wood and its integration with Amec Foster Wheeler continues to pay dividends.

“With a market capitalisation approaching £4.5bn, it may not be long before Wood makes a return to the FTSE 100, which could further bolster the share price with buying support from tracker and passive funds.”